Regulators Blame Libor Fixing On The Sex, Drugs, And Lavish Perks Of London BankingSubmitted by go213mph on Fri, 05/03/2013 - 16:31
You see, prostitutes, cocaine, and fraud are only illegal for average folks!
A number of major banks, mostly in London, were caught last summer in a whirlwind scandal for manipulating an obscure interest rate, the Libor. There were customary embarrassing instant messages and e-mails released in the complaint, and banks paid out billion dollar fines, but it was still hard to get people to pay attention to such an obscure number. The scandal just wasn't quite salacious enough.
But now it seems that element has arrived. Regulators suspect that London's high-flying banking culture led to an attitude that welcomed deceitful, conspiratorial behavior between traders and brokers, the WSJ reports. Traders and brokers are bonded together because brokers make handsome commissions from executing trades. It's a "symbiotic" relationship, the Journal points out, and in London the rules about "trading favors" are looser than they are in NYC. Banks could easily spend $50,000 on a single trader.
This, regulators say, created the perfect environment for something like the Libor scandal. In order to get traders to work with them, brokers allegedly gave traders early access to lucrative trades, bought entire trading desks lunch, flew them off to Vegas, procured cocaine and prostitutes for traders, and dropped straight cash at strip clubs.